<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File number 1-11278
THE DEWOLFE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2895334
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
80 Hayden Avenue
Lexington, MA 02173
(Address of principal executive offices) (Zip Code)
(617) 863-5858
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of latest practicable date (July 15, 1996)
Common Stock, par value $.01 per share, 3,330,989 shares
Page 1 of 24 pages, Exhibit Index appears on Page 11.
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THE DEWOLFE COMPANIES, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income (Loss) for the
Three Months and Six Months ended June 30, 1996
and June 30, 1995 4
Condensed Consolidated Statements of Cash Flows for
the Six Months ended June 30, 1996 and June 30, 1995 5
Notes to Condensed Consolidated Financial Statements
June 30, 1996 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II. OTHER INFORMATION 9
</TABLE>
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THE DEWOLFE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,893,000 $ 1,865,000
Commissions receivable, net of allowance of $1,171,000 at
June 30, 1996 and $593,000 at December 31, 1995 22,649,000 11,416,000
Mortgage loans held for resale 9,110,000 11,046,000
Note and advance receivable from stockholder 66,000 66,000
Prepaid expenses and other current assets 418,000 445,000
------------ ------------
TOTAL CURRENT ASSETS 34,136,000 24,838,000
PROPERTY AND EQUIPMENT
Furniture and equipment 6,155,000 5,480,000
Land, building and improvements 4,097,000 3,767,000
------------ ------------
10,252,000 9,247,000
Accumulated depreciation (3,905,000) (3,007,000)
------------ ------------
NET PROPERTY AND EQUIPMENT 6,347,000 6,240,000
OTHER ASSETS
Excess of cost over value in net assets acquired, net of
accumulated amortization of $619,000 and $557,000 1,897,000 1,959,000
Other Assets 1,532,000 2,169,000
============ ============
$ 43,912,000 $ 35,206,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $ 8,902,000 $ 10,724,000
Current portion of long term debt 1,387,000 1,315,000
Commissions payable 14,900,000 7,506,000
Accounts payable and accrued expenses 2,839,000 2,041,000
Deferred mortgage fee income 278,000 143,000
------------ ------------
TOTAL CURRENT LIABILITIES 28,306,000 21,729,000
LONG TERM DEBT, net of current portion 4,647,000 4,112,000
NON COMPETE AGREEMENTS AND CONSULTING
AGREEMENTS PAYABLE 992,000 1,172,000
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; 3,000,000 shares authorized;
none outstanding
Common stock, $.01 par value; 10,000,000 shares authorized; 3,298,656
shares issued at June 30, 1996 and
3,295,014 shares issued at December 31, 1995 33,000 33,000
Additional paid-in capital 6,135,000 6,116,000
Retained earnings 3,814,000 2,059,000
------------ ------------
TOTAL STOCKHOLDERS' EQUITY BEFORE TREASURY STOCK 9,982,000 8,208,000
Less Treasury Stock (2,857 shares), at cost (15,000) (15,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 9,967,000 8,193,000
------------ ------------
$ 43,912,000 $ 35,206,000
============ ============
</TABLE>
See notes to condensed consolidated financial statements
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THE DEWOLFE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Commission revenues $ 27,105,000 $ 24,770,000 $ 47,066,000 $ 40,383,000
Mortgage origination revenues 1,359,000 1,151,000 2,311,000 1,795,000
Other revenues 353,000 336,000 386,000 388,000
------------ ------------ ------------ ------------
TOTAL REVENUES 28,817,000 26,257,000 49,763,000 42,566,000
Commission expense:
Real estate brokerage 16,903,000 15,704,000 29,295,000 25,446,000
Mortgage origination 362,000 337,000 657,000 508,000
------------ ------------ ------------ ------------
TOTAL COMMISSION EXPENSE 17,265,000 16,041,000 29,952,000 25,954,000
------------ ------------ ------------ ------------
NET REVENUES 11,552,000 10,216,000 19,811,000 16,612,000
Operating expenses:
Compensation and benefits 3,215,000 3,244,000 6,396,000 5,961,000
Facilities 1,179,000 1,094,000 2,322,000 2,101,000
General and administrative 2,091,000 1,897,000 3,624,000 3,177,000
Marketing and promotion 1,552,000 1,950,000 2,893,000 3,246,000
Communications 379,000 294,000 652,000 590,000
Provision for doubtful accounts 126,000 98,000 372,000 230,000
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 8,542,000 8,577,000 16,259,000 15,305,000
------------ ------------ ------------ ------------
OPERATING INCOME 3,010,000 1,639,000 3,552,000 1,307,000
Other income (expenses):
Interest expense (297,000) (316,000) (539,000) (459,000)
Interest income 151,000 96,000 237,000 139,000
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 2,864,000 1,419,000 3,250,000 987,000
Income taxes 1,315,000 618,000 1,495,000 429,000
------------ ------------ ------------ ------------
NET INCOME $ 1,549,000 $ 801,000 $ 1,755,000 $ 558,000
============ ============ ============ ============
Earnings per common share $ 0.44 $ 0.24 $ 0.50 $ 0.18
Weighted average common
shares outstanding 3,511,442 3,397,159 3,509,960 3,174,200
</TABLE>
See notes to condensed consolidated financial statements
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THE DEWOLFE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
------------------------------
<S> <C> <C>
Increase (Decrease) in Cash
OPERATING ACTIVITIES
Cash received from customers $ 38,665,000 $ 31,613,000
Commissions and compensation paid to co-brokers,
sales associates and mortgage consultants (22,525,000) (18,865,000)
Operating expenses paid (14,333,000) (13,334,000)
Provision for doubtful accounts (372,000) (230,000)
Mortgage loans orginated for sale (89,473,000) (62,317,000)
Proceeds from mortgage loan sales 91,409,000 47,201,000
Net borrowings (repayment) on note payable, bank (1,822,000) 14,765,000
Interest received 237,000 139,000
Interest paid (541,000) (401,000)
Income taxes paid (838,000) --
------------ ------------
Cash provided (used) for operating activities 407,000 (1,429,000)
INVESTING ACTIVITIES
Expenditures for business combinations -- (1,596,000)
Expenditures for property and equipment (495,000) (395,000)
------------ ------------
Cash used for investing activities (495,000) (1,991,000)
FINANCING ACTIVITIES
Net borrowings under revolving line of credit 800,000 1,400,000
Principal payments on long term debt (703,000) (341,000)
Issuance of common stock 19,000 1,635,000
------------ ------------
Cash provided by financing activities 116,000 2,694,000
------------ ------------
NET INCREASE (DECREASE) IN CASH 28,000 (726,000)
Cash at beginning of period 1,865,000 1,919,000
------------ ------------
CASH AT END OF PERIOD $ 1,893,000 $ 1,193,000
============ ============
Supplemental Information:
Noncash investing and financing activities
Leases capitalized $ 510,000 $ 852,000
</TABLE>
See notes to condensed consolidated financial statements
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THE DEWOLFE COMPANIES, INC.
JUNE 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995.
NOTE B - ACCOUNTING FOR ADVERTISING
The Company expenses advertising costs as they are incurred. Advertising costs
for the second quarter of 1996 and 1995 were $1,189,000 and $1,460,000
respectively, and for the first six months of 1996 and 1995 these costs were
$2,144,000 and $2,319,000 respectively.
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THE DEWOLFE COMPANIES, INC.
JUNE 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Commission Revenues:
Commission revenues increased 9% in the second quarter of 1996 to $27.1 million,
an increase of $2.3 million over the second quarter of 1995. The first six
months commission revenues was $47.1 million, or 17% higher than the same period
in 1995. The increase in commission revenues is primarily attributed to an
increase in business in the Company's existing markets which the Company
believes was caused by a decrease in interest rates and a general improvement in
consumer confidence that had a generally positive effect on residential real
estate brokerage.
Commission revenues includes $1.4 million of revenues from relocation services
in the second quarter of 1996 as compared to $1.1 million in the second quarter
of 1995, an increase of 27%. For the first six months of 1996 commission
revenues from relocation services was $2.4 million as compared to $1.8 million
during the first six months of 1995. The increase is primarily due to an
increase in the number of corporate accounts and affinity groups that the
Company services.
Net revenues from commissions increased 12% or $1.1 million in the second
quarter of 1996 to $10.2 million and net revenues from commissions increased
19.5% or $2.9 million during the first six months of 1996 to $17.8 million. Net
commission revenues as a percentage of commission revenues increased to 37.8%
for the first six months of 1996 as compared to 36.9% for the same period in
1995.
Mortgage Origination Revenues :
Mortgage origination revenues increased 18% in the second quarter of 1996 to
$1.4 million, an increase of $208 thousand compared to the second quarter of
1995. For the first six months of 1996 mortgage origination revenues were $2.3
million or 29% more than the same period in 1995. The increase is primarily due
to an increase in mortgage banking business generally, which the Company
believes was caused by a decrease in interest rates and a general improvement in
consumer confidence.
Net revenues from mortgage origination as a percentage of total mortgage
origination income for the first six months of 1996 and 1995 was 72%.
Operating Expenses:
Operating expenses for the second quarter of 1996 decreased $35,000 from second
quarter of 1995 and as a percentage net revenues, operating expenses decreased
from 84% to 74%.
Operating expenses increased 6% or $1.0 million for the six months of 1996 to
$16.3 million compared to $15.3 million in the six months of 1995. Operating
expenses as a percentage of net revenues decreased from 92% to 82% for the six
months of 1995 and 1996, respectively, The increase of $1.0 million is primarily
due to variable cost increases caused by the increase in the Company's overall
business.
The decrease in operating expenses as a percentage of net revenue in 1996 is due
to the effects of the Company's cost cutting and restructuring plan, and in the
improvement in residential real estate brokerage and mortgage business
generally.
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Interest Expense and Interest Income:
Interest expense decreased by $19 thousand in the second quarter of 1996 as
compared to 1995 and increased by $80 thousand for the first six months of 1996
compared to 1995. The increase for the six months of 1996 is partially due to
interest expense from borrowings under the mortgage banking credit line that
provides financing for mortgage loans originated by the Company. Interest
expense from these borrowings was $135 thousand in the second quarter of 1996
and $131 thousand for the second quarter of 1995, and interest expense from
these borrowings for the first six months of 1996 and 1995 were $223 thousand
and $167 thousand, respectively. In addition, interest expense related to
acquisitions decreased by $15 thousand in the second quarter of 1996 as compared
to 1995, and acquisition interest decreased by $21 thousand in the first six
months of 1996 as compared to 1995. The remaining interest expense increase is
primarily due to the financing of capital lease obligations and the borrowings
under the revolving line of credit.
The increase of $55 thousand in interest income in the second quarter of 1996 as
compared to 1995, as well as the increase of $98 thousand for the first six
months of 1996 compared to 1995, is due to an increase in the amount of interest
earned from mortgage loans made to mortgage customers in 1996.
Net Income:
Net income increased 93% in the second quarter of 1996 to $1.549 million as
compared to $801 thousand in the second quarter of 1995. Net income for the
first six months of 1996 was $1.755 million compared to $558 thousand in 1995.
The increase in net income for the second quarter and for the first six months
of 1996 was primarily attributed to an increase in business in the Company's
existing markets, which the Company believes was caused by a decrease in
interest rates and a general improvement in consumer confidence that had a
generally positive effect on residential real estate brokerage as well as the
Company's cost cutting and restructuring plan.
Liquidity and Sources of Capital
Cash balances at June 30, 1996 and June 30, 1995 were $1.9 million. Cash
provided by operations for the first six months of 1996 was $407 thousand as
compared to cash used by operations for the first six months of 1995 of $1.4
million. In connection with the mortgage loan activity the Company obtained an
increase to its credit line that is used to finance mortgage loans that it
originates. The credit line was increased from $18 million to $25 million.
The Company's borrowings under its $3 million line of credit with the First
National Bank of Boston had an outstanding balance of $1.2 million at June 30,
1996.
The Company considers its future cash flow from operations combined with its
credit arrangements with the First National Bank of Boston to be adequate to
fund continuing operations, however, the Company expects to continue to expand
its existing businesses which may include opening new real estate sales offices
as well as making investments in or acquiring other real estate businesses. As a
result, the Company from time-to-time may seek additional or alternate sources
of debt or equity financing which may include the issuance of shares of the
Company's capital stock.
<PAGE> 9
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THE DEWOLFE COMPANIES, INC.
JUNE 30, 1996
PART II. OTHER INFORMATION
Item 4 Submissions of Matters to a vote of Security Holders
The annual meeting of the shareholders was held on May 14, 1996 in
Lexington, Massachusetts. A brief description of each matter voted upon at
the meeting and a tabulation of votes with respect to each such matter is
attached as Exhibit (22).
Item 6 Exhibits and Reports on Form 8-K
(a) The following Exhibits are included herein:
See Exhibit Index on page 11 of this report
(b) Reports on Form 8-K
None
<PAGE> 10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1996 THE DEWOLFE COMPANIES, INC.
By: /s/James A. Marcotte
--------------------------------
James A. Marcotte
Senior Vice President
and Chief Financial Officer
<PAGE> 11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1996 THE DEWOLFE COMPANIES, INC.
By:
--------------------------------
James A. Marcotte
Senior Vice President
and Chief Financial Officer
<PAGE> 12
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THE DEWOLFE COMPANIES, INC.
JUNE 30, 1996
EXHIBIT INDEX
10-Q
<TABLE>
<CAPTION>
ITEM DESCRIPTION LOCATION
- - ---- ----------- --------
<S> <C> <C>
(10) (i) Employment Agreement dated April 29, 1996............ Page 12 to Page 14
with James A. Marcotte of this report
(10) (ii) Stock Purchase Plan, as amended...................... Page 15 to Page 19
of this report
(11) Statement re: Computation of Per Share Earnings..... Page 20
(22) Published Report Regarding Matters Submitted to a
a Vote of Security Holders........................... Page 21 to Page 23
of this report
(27) Financial Data Schedule.............................. Page 24 of this report
</TABLE>
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement is made between The DeWolfe Companies, Inc. ("DeWolfe") and James
A. Marcotte ("Employee"). DeWolfe agrees to associate with Employee upon the
terms contained in this agreement, and Employee agrees to work in the best
interests of DeWolfe at all times, upon the terms contained in this agreement.
TERM: The employment shall commence on or before July 1, 1996 and will
continue until canceled, amended, or terminated as described in this agreement.
TITLE: The Employee will use the title "Chief Financial Officer", or any
other title designated by DeWolfe from time to time to describe the Employee in
dealings with others. The Employee shall be a Senior Vice President of The
DeWolfe Companies, Inc.
ASSIGNMENT: The Employee's assignment and responsibilities will be defined by
the Chief Executive Officer or Executive Vice President of DeWolfe, and may be
changed at any time. However, the Employee shall report directly to the Chief
Executive Officer in those instances wherein the Chief Executive Officer has so
requested or where otherwise deemed appropriate by the Employee. In general, the
Employee is responsible for managing the day-to-day activities involved with the
Accounting and Financial Resources Department of DeWolfe, including but not
limited to, (i) managing all other employees assigned, (ii) planning, budgeting
and implementing DeWolfe resources toward financial success, and (iii) in
general, directing a service oriented Accounting and Financial Resources
Department toward achieving the business goals established by the Board of
Directors of DeWolfe, including financial management and reporting for all of
DeWolfe's business units, and other responsibilities customarily associated with
the role of Chief Financial Officer of a public company. The Employee will keep
informed about DeWolfe's businesses in general, and about the specific
accounting principles applicable to DeWolfe; and shall participate in all
training, meetings and functions required by DeWolfe.
COMPENSATION: Compensation will be established by DeWolfe from time to time, and
initially will be paid in accordance with the Compensation Schedule attached as
Exhibit A. The Employee shall be entitled to all benefits generally provided by
DeWolfe to its senior executives. The Employee shall be entitled to 4 weeks
vacation time, mutually agreed upon, submitted in writing (vacation time may not
be carried forward to next year), accruing at a rate of 5 days after each three
month period of employment. Health insurance coverage, within the group plans
approved by DeWolfe for its employees, will be paid in full.
TERMINATION: This Agreement and the employment created thereby may be
terminated at any time without cause by either party upon 90 days written
notice. DeWolfe may terminate this agreement and the employment created herein
without notice for cause, including fraud, criminal activity, dereliction of
duties or willful failure to comply with the terms of the agreement or DeWolfe
policies or procedures. After termination, the Employee will not solicit any
employee, sales associate or manager or other person associated with DeWolfe or
its affiliated companies for the purpose of inducing that person(s) to terminate
employment or association with DeWolfe for a period of two years after said
termination. If the employment is terminated by DeWolfe without cause, but not
if the Employee terminates or if DeWolfe terminates with cause, then the
Employee shall receive severance payments in an amount equal to three month's
base pay, plus an additional three month's base pay for each year of
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employment completed, up to a maximum of $125,000, payable over a one year
period, in accordance with DeWolfe's payroll policy.
CONFIDENTIALITY: It is understood that the Employee may from time to time have
knowledge of information which is confidential in nature, including, but not
limited to customer and client lists, agent and management information, training
and procedures, manuals, sales tactics, strategies, financial results and other
trade secrets. The Employee will not, at any time during employment or after
termination, disclose any confidential information, nor trade in the stock of
The DeWolfe Companies, Inc. based upon confidential information.
NOTICES: Any notice required under this agreement will be deemed sufficient
if mailed or delivered to the parties at the following addresses:
Employee:
James A. Marcotte
43 Sparhawk Rd
Londonderry, NH 03053
DeWolfe:
Richard B. DeWolfe
The DeWolfe Companies, Inc.
80 Hayden Avenue
Lexington, MA 02173
GOVERNING LAW: This agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
Signed this day of April, 1996.
Employee The DeWolfe Companies, Inc.
- - --------------------------- ----------------------------------------------
James A. Marcotte By: Paul Harrington, Executive Vice President
<PAGE> 3
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COMPENSATION SCHEDULE
EXHIBIT A
DATE APRIL 1996
This compensation schedule is incorporated by reference in the Employment
Agreement between The DeWolfe Companies, Inc. ("DeWolfe") and the Employee named
below, and supersedes any prior Compensation Schedule. The Employee shall
receive base pay of $4,807.69 every two weeks ($125,000/ yr.) in accordance with
DeWolfe's current payment system. In addition, Employee will receive a grant of
options for 6,000 shares of DeWolfe stock, pursuant to the standard Incentive
Stock Option Agreement, a copy of which is attached hereto, at an exercise price
equal to the fair market value of DeWolfe common stock on the date of grant,
which shall be the date of commencement of employment. The Employee shall be
reimbursed for reasonable expenses incurred to promote the business of DeWolfe,
including travel, training, and education expenses necessary as a CPA, cellular
or mobile telephone service according to company policy, and professional
association dues that are reasonable and customary for a Chief Financial
Officers of a public company, as approved by the President or Executive Vice
President.
Employee The DeWolfe Companies, Inc.
- - --------------------------- ----------------------------------------------
James A. Marcotte By: Paul Harrington, Executive Vice President
<PAGE> 1
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EXHIBIT 10.11
THE DEWOLFE COMPANIES, INC.
1993 COMPANY STOCK PURCHASE PLAN
1. Statement of Purpose. The purpose of this 1993 Company Stock
Purchase Plan (the "Plan") is to benefit THE DEWOLFE COMPANIES, INC. (the
"Company") through the maintenance and development of its businesses by offering
certain present and future key individuals a favorable opportunity to become
holders of stock in the Company over a period of years, thereby giving them a
permanent stake in the growth and prosperity of the Company and encouraging the
continuance of their involvement with the Company and/or its subsidiaries.
2. Administration. The Plan shall be administered by the Company Stock
Purchase Plan Committee (the "Committee"), consisting of not less than two
directors of the Company appointed by the Board of Directors, all of whom, to
the extent possible, shall be "disinterested" within the meaning of the rules
and regulations promulgated under Section 16(b) of the Securities Exchange Act.
If no Committee shall be appointed, this Plan shall be administered by the Board
of Directors, which Board shall be deemed the Committee for purposes of this
Plan. The Committee shall have full and plenary authority to interpret the terms
and provisions of the Plan.
3. Eligibility. Stock purchase awards (-awards"), each such award
entitling the recipient thereof to purchase shares of Common Stock of the
Company (as herein provided) shall be granted only to key employees of the
Company and its subsidiaries, and consultants, (including sales associates,
relocation counselors, financial services officers and managers) and advisors of
the Company and its subsidiaries (where bona fide services were rendered and
such services were not in connection with the offer and sale of securities in a
capital raising transaction) but excluding executive officers and directors of
the Company and holders of 10% or more of the Company's Common Stock, selected
initially and from time to time thereafter by the Committee on the basis of
their importance to the business of the Company or its subsidiaries.
4. Method of Participation. The Committee may grant awards under which
a total of not in excess of 150,000 shares of the $.01 par value Common Stock of
the Company ("Common Stock") may be purchased from the Company, subject to
adjustment as provided in Section 11 hereof. The grant of an award shall be
evidenced by a letter written by the President of the Company to the recipient
of the award stating the number of shares of Common Stock subject to the award,
the period during which the award must be exercised and such other terms and
conditions consistent with the terms of this Plan as the Committee may from time
to time determine.
<PAGE> 2
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In the event that an award expires or is terminated or cancelled
unexercised as to any shares, such released shares shall be available to be sold
by the Company pursuant to future awards. Shares subject to awards may be made
available from unissued or reacquired shares of Common Stock.
Nothing contained in the Plan or in any award granted pursuant thereto
shall confer upon any recipient any right to be continued in the employment of
the Company or any subsidiary of the Company, or interfere in any way with the
right of the Company or its subsidiaries to terminate an employee's employment
at any time, or interfere in any way with the right of the Company or its
subsidiaries to terminate any consulting or other compensation arrangement
between the Company or any subsidiary of the Company, and any consultant
(including any sales associate, relocation counselor, financial services
officer, manager or advisor) of the Company or such subsidiary.
5. Purchase Price. The purchase price for shares of the Company's
Common Stock which are the subject of an award shall be equal to the fair market
value, at the time the award is exercised, of the shares of Common Stock subject
to the award. Such fair market value shall be deemed to be the last trading
price of the Common Stock on the trading day next preceding the date of exercise
of the award except that if the Common Stock is then listed on any national
exchange, fair market value shall be the mean between the high and how sales
price on the date next preceding the exercise of the award. If shares of the
Common Stock shall not have been traded on any national exchange or interdealer
quotation system for more than 10 days immediately preceding the date of
exercise of the award or if deemed appropriate by the Committee for any other
reason, the fair market value of shares of Common Stock shall be determined by
the Committee in such other manner as it may deem appropriate. In no event shall
the fair market value of any share of Common Stock be less than its par value.
6. Duration of Options. Increments. and Extensions. Subject to the
provisions of Section 8 hereof, each award shall be for a term of not more than
twelve months.
7. Exercise of Stock Purchase Award. An award may be exercised by
giving written notice to the Company, attention of the Clerk, specifying the
number of shares to be purchased, accompanied by the full purchase price for the
shares to be purchased either in cash, by check, through payroll or commission
withholding, or, if so approved by the Committee, by a promissory note in a form
specified by the Committee and payable to the Company no later than 5 business
days after the date of exercise of the award or, if so approved by the
Committee, by shares of the Common Stock of the Company, or by a combination of
these methods of payment. For this purpose, the per share value of the Common
Stock of the Company shall be the fair market value on the date of exercise as
computed
<PAGE> 3
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pursuant to Section 5 hereof. The Company may also from time to time elect to
reimburse a recipient for the exercise price of an award granted hereunder in
the form of a bonus to the extent deemed appropriate by the Committee in
consideration of services performed by the recipient-on behalf of the Company.
Alternatively, the Company may issue shares directly to participants as a bonus
or as additional compensation. Any such direct issuance of shares by the Company
as provided in the preceding sentence shall be subject to the right of the
Company to elect to reacquire said shares upon termination of the recipient's
relationship with the Company as provided in Subsection 8(b) below.
At the time of exercise of any award, the Company may, if it shall
determine it necessary or desirable for any reason, require the recipient as a
condition upon the exercise thereof to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the recipient upon his exercise of part or all of the award and a stop
transfer order may be placed with the transfer agent. Each award shall also be
subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the shares
subject to the award upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of or in connection with, the issue or purchase of
shares thereunder, the award may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
8. Termination of Relationship. (a) In the event the relationship
between the Company and any employee, consultant (including any sales associate,
relocation counselor, financial services officer, or manager) or advisor who is
the recipient of an award is terminated for any reason such recipient's award
shall expire and all rights to purchase shares pursuant thereto shall terminate
immediately. Temporary absences because of illness, vacation, approved leaves of
absence, and transfers among the Company and its subsidiaries, shall not be
considered to terminate the employment or consulting or sales relationship with
the recipient or to interrupt continuous employment.
(b) During the ninety (90) day period immediately following the
termination of the relationship between the Company and a recipient who became a
participation in this Plan through the direct issuance of shares as a bonus or
as additional compensation, the Company shall have the right to elect to
repurchase all of such shares, by sending to such recipient at his last known
address a notice of such election (the "Repurchase Notice") together with a
check representing the repurchase price in an amount equal to the fair market
value of such shares (determined as provided in Section 5 above) as of the date
of the Repurchase
<PAGE> 4
-18-
Notice. Upon receipt of the Repurchase Notice and check for the repurchase
price, the recipient whose shares are being repurchased shall tender to the
Company the certificate or certificates, if any, representing the repurchased
shares, together with stock powers executed in blank attached thereto. In the
event such shares are not evidenced by a certificate or certificates, such
shares shall be deemed to have been transferred to the Company as of the date of
the Repurchase Notice when a copy of the Repurchase Notice is delivered to and
received by the Company's transfer agent.
9. Withholding Taxes. Whenever the Company is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the right
to require the grantee to remit to the Company an amount sufficient to satisfy
federal, state and/or local withholding tax requirements (if any) prior to the
delivery of any certificate or certificates for such shares. The Company may in
its discretion permit a recipient to deliver a promissory note in a form
specified by the Company and payable to the Company no later than 5 business
days after the date of exercise of an award in payment of any withholding tax
requirements of the Company with respect to such exercise. Alternatively, the
Company may, in its discretion, issue or transfer such shares of Common Stock
net of the number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock shall be
valued on the date the withholding obligation is incurred.
10. Non-Transferability of Awards. No award shall be transferable by
the recipient, and each award shall be exercisable only by the recipient.
11. Adjustment. The number of shares subject to the Plan and to awards
granted under the Plan shall be adjusted as follows: (a) in the event that the
number of outstanding shares of Common Stock of the Company is changed by any
stock dividend, stock split or combination of shares, the number of shares
subject to the Plan and to awards granted thereunder shall be proportionately
adjusted; (b) in the event of any merger, consolidation or reorganization of the
Company with any other corporation or corporations, there shall be substituted,
on an equitable basis as determined by the Committee, for each share of Common
Stock then subject to the Plan, whether or not at the time subject to
outstanding awards, the number and kind of shares of Stock or other securities
to which the holders of shares of Common Stock of the Company will be entitled
pursuant to the transaction; and (c) in the event of any other relevant change
in the capitalization of the Company, the Committee shall provide for an
equitable adjustment in the number of shares of Common Stock then subject to the
Plan, whether or not then subject to outstanding awards. In the event of any
such adjustment, the purchase price per share shall be proportionately adjusted.
<PAGE> 5
-19-
12. Termination and Amendment of Plan. This Plan shall terminate ten
years from the effective date of this Plan, and an award shall not be granted
under the Plan after that date. The Plan may at any time or from time to time be
terminated, modified, or amended by Board of Directors of the Company. In no
event shall any amendment of the Plan (i) change or impair any awards previously
granted without the consent of the recipient, or (ii) extend the term of the
Plan.
13. Effect on Other Plans. Nothing contained in this Plan shall be
deemed to interfere or affect in any way the ability of an eligible recipient of
awards under this Plan to participate in stock option plans or other stock
purchase plans adopted or sponsored by the Company. Participation in the Stock
Purchase Plan of the DeWolfe Companies, Inc. shall not be deemed to constitute
participation in this 1993 Company Stock Purchase Plan.
14. Effective Date. This 1993 Company Stock Purchase Plan as originally
adopted, became effective as of May 10, 1993. The plan was amended by the
Board of Directors of the Company and became effective, as amended, on May 14,
1996.
<PAGE> 1
-20-
THE DEWOLFE COMPANIES, INC
Exhibit (11) Statement Re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Weighted Average
Shares Outstanding 3,295,746 3,293,317 3,294,264 3,070,364
Net effect of dilutive stock
options-based on the treasury
stock method using the
period end market price if
higher than average market price 215,696 103,842 215,696 103,842
---------- ---------- ---------- ----------
Total 3,511,442 3,397,159 3,509,960 3,174,206
========== ========== ========== ==========
Net Income $1,549,000 $ 801,000 $1,755,000 $ 558,000
========== ========== ========== ==========
Net Income Per Share $ 0.44 $ 0.24 $ 0.50 $ 0.18
========== ========== ========== ==========
</TABLE>
<PAGE> 1
-21-
EXHIBIT 22
July 22, 1996
BOSTON EQUISERVE
BOSTON EQUISERVE
LIMITED PARTNERSHIP
150 ROYALL STREET
CANTON, MA 02021
617-575-2000
JIM MARCOTTE
CHIEF FINANCIAL OFFICER
THE DEWOLFE COMPANIES, INC.
80 HAYDEN AVE.
LEXINGTON, MA 02173
CERTIFICATE OF TABULATION
Dear Mr. Marcotte:
In connection with the Annual Meeting of Shareholders of The DeWolfe Companies,
Inc. held on May 14, 1996, we tabulated proxies representing 2,910,301 shares of
Common Stock or 88.306% of the total outstanding shares voted in the following
manner:
PROPOSAL I (Election of Directors)
<TABLE>
<CAPTION>
Withheld From
For All Nominees Instructed All Nominees
- - ---------------- ---------- ------------
<C> <C> <C>
2,896,255 0 14,045
</TABLE>
<PAGE> 2
-22-
PROPOSAL II (Auditors)
<TABLE>
<CAPTION>
For Against Abstain No Vote
- - --- ------- ------- -------
<S> <C> <C> <C>
2,895,468 12,970 1,862 0
</TABLE>
PROPOSAL III (Amendment of 1992 Non-Employee Director Plan)
<TABLE>
<CAPTION>
For Against Abstain No Vote
- - --- ------- ------- -------
<S> <C> <C> <C>
2,750,002 150,212 10,086 0
</TABLE>
The Affidavit of Mailing was forwarded to you April 22,1996. We further certify
that on the record date of March 22, 1996, there
were 3,292,241 shares of Common Stock of the Company issued and outstanding and
entitled to be voted at the Annual Meeting if represented.
Sincerely,
STACEY N. SEREMETIS
Stacey N. Seremetis
Boston EquiServe L.P.
Account Manager
<PAGE> 3
-23-
Jim Marcotte, CFO
The Dewolfe Companies
Schedule A
SCHEDULE OF VOTES CAST FOR EACH DIRECTOR
<TABLE>
<CAPTION>
Withheld Total Vote For Total Vote
Director Each Director From Each
- - -------- ------------- ---------
<S> <C> <C>
Richard B. DeWolfe 2,896,804 13,496
A. Clinton Allen 2,896,804 13,496
Paul R. Del Rossi 2,896,255 14,045
R. Robert Popeo 2,896,255 14,045
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET (UNAUDITIED) AND CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BE REFERENCE TO SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,893
<SECURITIES> 0
<RECEIVABLES> 22,715
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,136
<PP&E> 10,252
<DEPRECIATION> 3,905
<TOTAL-ASSETS> 43,912
<CURRENT-LIABILITIES> 28,306
<BONDS> 7,026
0
0
<COMMON> 33
<OTHER-SE> 9,934
<TOTAL-LIABILITY-AND-EQUITY> 43,912
<SALES> 0
<TOTAL-REVENUES> 49,763
<CGS> 0
<TOTAL-COSTS> 29,952
<OTHER-EXPENSES> 16,259
<LOSS-PROVISION> 372
<INTEREST-EXPENSE> 539
<INCOME-PRETAX> 3,250
<INCOME-TAX> 1,495
<INCOME-CONTINUING> 1,755
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,755
<EPS-PRIMARY> .53
<EPS-DILUTED> .50
</TABLE>
